Chia Network is a new blockchain and smart transaction network which uses refined and modern technology to change the narrative on blockchain technology and cryptocurrency. The ultimate aim of the Chia network is to provide the ‘magic internet money by making its platform and cryptocurrency easier to use, more efficient, and safer for its users.
This article sets out to give an appraisal on the Chia network. To achieve this, an introduction to DeFi and blockchain technology is imperative. The summary of this introduction is simply ‘from Bitcoin to Chia’ and it sets out to make DeFi and blockchain understandable to the daily reader.
DeFi, short for decentralized finance is the new buzz of the finance sector and it has been caught by almost everyone. If you haven’t understood it before now, no worries!! For starters, DeFi is just an umbrella term for any application or mechanism that removes the powers and functionality of ‘middlemen’ and financial houses such as banks. It is simply the opposite of centralized finance. DeFi has long been clamoured for but finally had its first breakthrough from the inception of Bitcoin in 2009. Blockchain technology is the instrument upon which DeFi has spread around the world.
DeFi is now very vast and has touched almost every area of finance thereby limiting the use of traditional agencies and their centralized methods of finance. DeFi has stretched its wings from cryptocurrencies which are touted to be a digital replacement for traditional fiat currency. Cryptocurrencies are decentralized because their production (minting) and distribution aren’t done by a centralized body that has the monopoly to do so as everything about it takes the decentralized approach from minting to confirming transactions and the determination of its value is driven based on market forces alone.
It is important to note that though decentralization is the hallmark of cryptocurrencies, some are more decentralized than others. DeFi has also set its wings on trading as we now have automated market makers which work on algorithms instead of the traditional order book method. Collectibles are not far from the reach of DeFi as digital collectibles, NFT’S are now trending. Indeed, DeFi has changed the way financial transactions are being carried out globally.
Blockchain is simply a decentralized public ledger that is used to record transactions on its blocks. DeFi solutions and cryptocurrencies run on the blockchain. The bitcoin blockchain whitepaper was the beginning of this new road in finance. Founded by Satoshi Nakamoto, the Bitcoin Blockchain set the ball rolling and houses the cryptocurrency, bitcoin which makes it the largest blockchain in the world. Blockchain technology has developed since then and is now very vast and can be used to solve many problems from Finance to even Academics as utilized by Cardano in Ethiopia.
The Ethereum blockchain is the blockchain that has pushed DeFi solutions so far housing over 3000 decentralized applications. Each blockchain has its different mechanisms and its native cryptocurrency. The setup of a blockchain is a determining factor in the adoption of a cryptocurrency. Blockchain technology must be safe and have good development and incentives for its users and above all must be safe. Chia network as a new blockchain solution sets out to improve on the shortcomings of earlier blockchains while creating the perfect magic money.
Chia Network: The Blockchain of the Future
Of what use is a digital currency if it’s not safe and Secure? Why not then stick to traditional currency? Chia network builds its unique question whilst answering these questions and establishing a properly decentralized blockchain. As touted by the development team, the Chia Blockchain is easier to use, more protected, and more efficient. According to the team, the utility of cryptocurrencies lies in the fact that it is harder to steal. Imagine moving your fiat currency to a digital currency and it still somehow gets stolen. It will be a very sad occurrence because digital assets ought to provide a level of security for the users.
Chia Network revamps old ideas in blockchain technology as it is the first new “Nakamoto consensus algorithm since Bitcoin in 2008″. It is a blockchain with a twist as it does all other previous blockchain functions albeit better but with less energy and with environmentally friendly mechanisms. The Chia Blockchain Network is also supporting a level playing field for everyone as it supports an easy and efficient mining process. Due to this, anyone who wishes to mine on its Blockchain can do so even without having large and highly functional equipment like other blockchain networks. With this, the whole process is truly decentralized.
Although other Blockchain networks are generally decentralized, their mining protocol is huge and it leads to big institutions doing the bulk of the mining because they can get the massive equipment and the electricity needed to complete the mining process. This makes a decentralized process more centralized. Chia network makes it possible for people to mine on its platform without single-use hardware.
Founded by the renowned Bram Cohen who is also the founder of BitTorrent, the Chia Network develops a more secure environmentally friendly Blockchain and Smart contract platforms which eliminates the more popular and energy-consuming “proof of work” with the more refined and less energy-consuming “proof of space and time”.
A major utility of the Chia Network is its on-chain programming language which perfects all its developments. It is a special programming language and its powers make the platform safer, secure, and also easier to audit. On May 3, 2021, the platform rolled out its own cryptocurrency XCH and the programming language, Chialisp.
Chialisp is a “smart coin language” as everything on the Chai Blockchain is a coin, unlike others. This smart coin offers unique features like transactional compatibility and smart contract packages. Chialisp is a robust package in which applications on the network can function for banking, asset distribution, payments, and exchanges with features such as atomic swaps, multi-signature wallets, rate limit wallets, coloured coins, etc.
The Chai Blockchain operates on a proof of work model which makes it energy saving and enables anyone who wishes to join the mining process to be able to verify transactions without the use of single-use hardware thereby making the process more decentralized. All that is needed for efficient mining is sufficient storage space.
Before now, proof of work was the most used system. It simply means that one party, which may be referred to as the prover has to prove to others that a certain amount of computer-generated effort has been spent on a network.
This system is largely energy-consuming and has led to the development of proof of space and time. It simply means proving that a network participant has allocated a required level of storage capacity to a network over some time. The hallmark of this being to prove financial interest in a network. Proof of space and time indicating financial interest in a network by the allocation of disc space makes the process less energy-consuming.
While proof of work focused on computer speed and power which makes systems more centralized, Chia Network adopts the more efficient and less energy-consuming proof of space and time which is the first of its kind in the crypto-verse. This model greatly reduces the inequalities in farming and makes its cryptocurrency and blockchain a planet-friendly network. With this Chia model, farmers on its blockchain will have to create plots on hard drives using CPU cycles and then utilize the energy-efficient drive space in the consensus mechanism that verifies new blocks on the blockchain.
XCH – The Coin of the Future
XCH is the native and first cryptocurrency of the Chia Blockchain. The green digital currency was developed because of the need to set digital assets as they need to be, fast and efficient, easier to use than traditional fiat currencies, and very secure which makes it harder to steal. The cryptocurrency is used to reward farmers on the blockchain.
A farmer could gain 2 XCH per block within the first three years. In launching the coin, the Blockchain became the largest and most decentralized blockchain by full node count with its nodes exceeding 100,000.
Though the Chia project started a long time ago, its Chia coin was first made available for trading on 3rd May 2021 and started strong trading as high as $1800 per unit before dropping to less than $1300. The Chia coin project has raised over $30million since its inception. Like almost all digital assets, Chia coin is easily accessible and can be purchased by using cryptocurrencies like Bitcoin and tether. Recently, Crypto.com announced that it would now list Chia coin on its platform.
The Green Coin
The whole world is concerned about climate change. Cryptocurrencies are decentralized and tipped to be the currency of the future but this comes at a price. The environmental effect of mining cryptocurrency is very shocking. Just last week, Elon Musk announced that Tesla will cut ties with Bitcoin temporarily because of its high carbon footprint during mining.
A Cambridge University report shows that Bitcoin energy usage is the same as was used in The Netherlands in 2019. Elon Musk who had backed Bitcoin before now shifting grounds stating that Tesla will no longer accept payment in Bitcoin and halts the company’s sale of its Bitcoins till the mining process becomes environmentally friendly.
He further revealed that the company is in search of cryptocurrencies with less than 1% of Bitcoin’s energy consumption. Chai Coin could be that “chosen coin” due to its environmentally friendly nature. The annual CO2 Impact of Bitcoin is 45.34mt. This figure can be compared to big industrial cities. The proof of work model isn’t helping the environment and while Ripple and Cardano are focused on the proof of stake while Chia Network has evolved a proof of space and time model. This model however is leading to hard disk shortages but overall, it is for the good of all.